In most of Canada’s major metro areas, the cost of a newly built home stayed the same or even went down in August as compared to last year. According to Statistics Canada’s new housing price index, only five out of 27 metro areas posted growth above 1%.
The story is much different in Alberta. Calgary led all metro areas with growth of 4.1%, followed by Trois-Rivières at 3.1% and Edmonton at 2.1%. Then came Quebec City (1.2%) and Saskatoon (1.1%).
It’s Calgary’s strong and continuous population growth and very few options available in the resale market that continuously push prices up in the city. Real estate costs have risen consistently since November 2020.
The average resale home price in August in Calgary was $581,200 and $396,400 in Edmonton.
Home prices in Edmonton lost ground from March 2023 to March 2024, however since then they have been on the rise. It’s assumed that the lower price points available in Alberta’s capital city are attracting more buyers, which is helping push prices upwards. Alberta remains relatively affordable in comparison to some other provinces, with the median price of a new single-family/semi-detached home in Canada at $760,000 in August as compared to $650,000 in Alberta, $1,930,000 in B.C. and $1,030,000 in Ontario.
New population projections prepared by Alberta Treasury Board (ATB) and Finance show that Alberta will grow by over 2.3 million people between now and 2051, which means we’re looking at 48% more people than today and a total of almost 7.3 million people.
ATB’s projections also show that 87% of the new residents will be added to the Calgary (+1,064,10) and Edmonton (+962,015) economic regions, which will require a lot more homes to be built in the province’s two largest cities, and fast, in order to maintain affordability.
Affordability is a major concern
According to the Government of Alberta, Calgary had a population of 1.5 million in 2023, making it the largest and fastest-growing city in the province. Calgary’s population has increased 6.20% year-over-year, and exploded 13.4% in the last five years. Due to its lower cost of living, however, Edmonton may take home the title of Alberta’s fastest-growing city for 2024.
People are chasing affordability and trying to find places they can live that provide financial opportunities, but also where they can also provide their families with food and shelter without placing too much stress on their paycheques. Though inflation has slowed down substantially, affordability remains a major concern after four years of rapid price increases, higher interest rates, and a softening labour market.
It’s a very fine balance. The results of Canada’s 2022 Affordability Index, as reported by CityNews, shows a majority of people in the province are struggling to pay their bills.
Approximately 50% of Albertans are living paycheque to paycheque. Rising costs due to inflation, high interest rates, and stagnant income growth are significant contributors to this financial strain. Many Albertans are finding it difficult to save for the future, with a vast majority of earnings going toward essential living expenses such as housing, transportation, and food. This trend is in line with the national average, where nearly half of Canadians face similar financial challenges, struggling to meet their obligations if their paycheque is delayed by even a week
Rising home prices means it’s time to revisit your insurance … and it’s time to talk to an insurance broker
Rising home prices and home insurance are, in fact, closely linked. As home values increase, so does the cost to rebuild or repair a home if it’s damaged or destroyed. This is because insurance policies are typically based on the cost to rebuild the home, not just its market value.
Market value for a home is the estimated price it would sell for on the open market, considering factors like location, condition, demand, and comparable sales in the area.
When home prices rise, the cost of construction materials, labour, and related expenses often increases as well. Everything costs more these days, and so insurers adjust premiums to account for these higher rebuilding costs. This results in higher insurance premiums for homeowners.
Rising home prices can mean you could be underinsured if you haven’t adjusted your policy to reflect the increased value of your property. If a home is significantly undervalued on an insurance policy and needs to be rebuilt, the insurance payout might not cover the full cost, leaving homeowners with a significant financial gap.
In areas where home prices are skyrocketing due to demand (such as Alberta), insurers may see more risk and raise rates to protect themselves from potential large-scale payouts in expensive markets.
It’s always worth it to revisit your home insurance coverage annually, and renewal time is the best time to do it. This is when you can shop around for better policies and switch companies without penalty. This is also the very best time to consult an insurance broker such as us at Lane’s. We do the comparison shopping for you and work for you, not the insurance companies.
Brokers get better deals
At Lane’s Insurance in Calgary, our experienced account managers are there to give the personalized support you need. You can rely on your broker to provide the professional service necessary to help you make a smart, educated decision. We have a proven track record of avoiding underinsurance or unnecessary claims, which saves insurers money. If you would like to have another look at your home insurance, contact us at:
- Our Calgary office
- Our Edmonton office
- Our Banff office
- Serving the rest of Alberta
